State eyes sugar liberalisation

  • Reforms to enhance distribution networks, combat hoarding
  • NFRA to be fully engaged in efforts to combat price manipulation

DAR ES SALAAM: TANZANIA’s sugar sector is on the brink of major reforms, aimed at addressing a significant deficit, with proposed amendments to legislation poised to liberalise the sweetener business.

Agriculture Minister, Hussein Bashe announced the impending changes during a meeting at the State House in Dar es Salaam on Thursday, emphasising the need to revamp the industry to effectively meet national demand. Minister Bashe underscored that the reforms would challenge established players in the sugar sector by opening the market to foreign competition.

He affirmed plans to amend the Sugar Industry Act of 2001, to allow individuals from outside the country to import and sell sugar, signalling a shift toward greater market liberalisation.

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“In the upcoming budget session, in my capacity as the accountable minister, I am proposing alterations to legislation aimed at opening up the sugar market. Domestic producers will engage in competition with international firms, and the government will offer incentives available domestically to support them.

“However, it is imperative to note that we cannot indefinitely shield these entities. They have received ample protection thus far, and it is time for them to stand on their own. Following the legal amendments, they will no longer be expected to solely address the sugar deficit,” Mr Bashe said.

The minister stressed that while the government would provide incentives to safeguard local manufacturers, it was imperative to foster healthy competition and reduce reliance on protected entities.

Speaking to editors from various media outlets, Minister Bashe highlighted the gravity of the current sugar deficit likening it to challenges faced in 2017-2018, insisting the need for proactive measures, citing the commencement of imports through the National Food Reserve Agency (NFRA) as a critical step to address the concerns.

The government’s decision to grant import permits to sugar factories underscores the urgency of the situation. Despite issuing permits for substantial imports, Minister Bashe noted significant shortfalls in actual imports, attributing the gap to various factors, including adverse weather conditions. He stated that the government had also granted import permits to various factories before deciding to use NFRA.

“TPC Limited was authorised to import 10,000 tonnes, Bagamoyo Sugar 10,000 tonnes, and Mtibwa Sugar 10,000 tonnes. Collectively, sugar factories were expected to import 50,000 metric tonnes.

However, as of now, Kilombero has imported no more than 2,000 tonnes and Kagera Sugar has imported no more than 2,000 tonnes,” he said.

Anticipating a shortfall of over 300,000 tonnes this year due to El Nino’s impact on sugarcane farms, the government remains committed to importing sugar to stabilise prices and meet demand. Minister Bashe assured citizens of ongoing efforts to combat price manipulation, citing recent crackdowns on errant traders engaging in fraudulent practices.

The minister highlighted a significant challenge concerning fraudulent activities among traders, particularly retail traders. “To date, 84 traders have been apprehended, and we are in the final stages of legal proceedings against them,” stated Mr Bashe.

Furthermore, he said the reforms seek to enhance distribution networks and combat hoarding practices that exacerbate price volatility.

The government has mandated factories to establish depots across regions and introduced stringent measures to monitor sugar distribution and pricing. Last year, sugar demand reached 490,000 tonnes, resulting in a sugar deficit of 30,000 tonnes compared to the 200,000-tonne target. Despite this, production increased to 460,000 tonnes, leading to approximately two years of price stability.

“This year, our production target is 550,000 tonnes. Following the Tanzania Meteorological Authority’s (TMA) El Nino weather forecast issued, last October we initiated preparations for sugar importation. Import permits for no less than 100,000 tonnes were issued,” he stated.